What Makes Client Data So Important to Mergers & Acquisitions

Colin Ward
3/22/22 10:20 AM

After a merger and acquisition (M&A), how much confidence would you have in the accuracy of your client data? Post M&A you're creating more data and doing it quickly, hoping to generate revenue. Products, services, contracts, and more need to align correctly.

This means integrating data from disparate sources.

For more than three decades, Kingland has worked with many of the world's most integral public accounting firms. Revenue generation is the ultimate goal for many. Firms need unquestionably accurate data and the right data management system to reach that goal.

Mergers and Acquisitions Influence Data Accuracy

Every M&A occurrence creates multiple versions of "data truths." Blame data silos. Generally speaking, larger organizations tend to make more data silos. This is a natural evolution of individual business units modifying data to fit their needs, which often results from corporate growth through acquisition. For example, an acquired company's client data is generally left untouched so it can continue to power the applications of the acquired company. Either way, this means sub-optimal data quality, data duplication, difficulty in reusing data across applications or to power analytics, and increased data maintenance costs. What's needed is a common language, a holistic view, and management focus requisite to the importance of the data.

Remember. We're collecting client data that identifies who they are, what they do, where they are, and who they might do business with. Without an enterprise view that can incorporate data from isolated sources or acquired firms, we're flying blind.

A sound client management system can move the business forward by reducing risk and cost. And it can present opportunities to generate revenue to help clients.

Client Data is Essential

Many decisions about client data are made at the departmental level by a partner responsible for their client engagements. It isn't easy to centralize the business case among all partners when each individual likely has different engagement strategies based on the services they provide. And even if client data is identified as a worthy investment, the investment needs to be prioritized against others.

Client data investment usually takes a back seat to other projects that could generate revenue for a firm. This is especially true if client data is viewed as "good enough" so that patches and other short-term fixes can be applied, exacerbating the silo issues and increasing maintenance costs. Therefore, understanding the total value of good client data at a corporate level should be prioritized. A moderate investment in the quality of client data will pay dividends for accounting firms both in reduced operational costs and in the expedited engagement execution that comes with the trust employees have in the data.

Client Data is Foundational

Client data is connected to everything. Onboarding. Conflict checking. Regulatory reporting. The quality of client data impacts many areas of the middle and back offices. Because of that, accounting firms are wary of messing with it for fear it will have unforeseen downstream consequences.

They are right to be fearful, but they should understand the opportunities to exploit client data to:

  • Develop client-centric models
  • Create revenue-generating products and services
  • Reduce risk and operating costs

Firms can liberate client data to be a business driver, not a drag on it. But doing so is not easy. Client data continually changes as new clients are added, existing clients are dropped, and reference data is associated with existing clients. The technology required to support effective client data solutions is not generally a component of legacy systems. Building and maintaining client hierarchies and incorporating data from unstructured sources are two examples where many legacy technologies fall short.

Client Data Transforms the Business

Getting to the point of truly transforming the business is an arduous task. You're dealing with legacy systems, legacy sources, and business applications from prior mergers and acquisitions. You won't find an easy path to success. If it were easy, it would have been done by now. But you can find a way because the reward is substantial. You can discover a path that leads to more significant opportunities. This happens when the business uses up-to-date information and provides complete and accurate client data to all applications and business processes that require it, while allowing each business to use the data in a manner best suited for them.

Whether related to client onboarding and services, firm and personal independence risk monitoring, or regulatory reporting, there are many areas where this data will improve operations. For example, think about lengthy onboarding times that lead to a loss in revenue. Think about the opportunities if you could extract data from third-party sources automatically and route that data to where it needs to be. A 'single source of truth' eliminates the guesswork. True client risk profiles can be developed. Engagement letters start getting signed faster. Risks are reduced, operating costs are lowered, and additional revenue is generated.

Welcome to a successful and obtainable outcome.

Let's tie your client data journey to revenue generation.

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